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CFA Level 2
Derivatives

Determining Forward Price of Fixed Income Security

Very Easy Forward Pricing And Valuation Fixed Income Forwards

In the context of fixed income forwards, consider a forward contract where an investor agrees to buy a specific fixed income security at a predetermined price at a specified future date. The price of the forward contract is influenced by various factors such as the current interest rates, the time to maturity, and the coupon payments of the bond.

What is the primary factor that determines the forward price of a fixed income security?

Hint

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